Tag Archives: Smoot-Hawley

Tariffs Weaken more than Trade

Right in the Middle of his Speech

In this cartoon titled Right in the Middle of His Speech (Knott) we see a man identified as President Herbert Hoover falling through a stage labeled “G.O.P. Platform”. One of the planks, titled “Tariff Plank” has given snapped in two. Hoover is holding a sheaf of papers titled “Blessings of High Tariff”. From the title of the cartoon it is evident that Hoover was delivering his speech from these papers. At the bottom of the panel a sketched crowd of people are sitting on the ground, smiling at his plight. The cartoon is dated October 15, 1932 and the associated editorial is titled Tariffs Come Home to Roost (“Tariffs Come Home to Roost” 2). The unnamed author of the editorial lists the ways that the “Blessings of High Tariff” harmed the economy of the United States and Hoover’s chances of reelection.

Although the tariffs are not named anywhere in the comic or the editorial, there is only one tariff that was infamous enough to be the tariff on everyone’s mind: the Tariff Act of 1930, commonly known as the Smoot-Hawley Tariff or Smoot-Hawley. It was passed into law over two years before this cartoon was published, but the tariff was still very much on the minds of citizens and voters.

In 1932 people were blaming President Hoover for the Great Depression. Even today economists debate whether the Smoot-Hawley Tariff turned what might have been a global economic downturn into The Great Depression (“Smoot-Hawley Tariff Act”). At the time of its inception, the Smoot-Hawley Tariff was protested by bankers, economists, and editorial writers across the nation. Over a thousand economists signed a petition to protest the Smoot-Hawley Tariff (“The Battle of Smoot-Hawley”). In 1930 the tariff on dutiable imports was 6% on average. However, at the time Knott published this cartoon in 1932 the forces of deflation raised the effective rate of tariff costs on dutiable imports by 59.1%. (“The Battle of Smoot-Hawley”).

Before Smoot-Hawley was signed into law the stock market had seen some notable recovery from its infamous 1929 crash, but the market took another nosedive as soon as it became clear that Smoot-Hawley would pass. Other nations responded quickly with tariffs of their own. For example, the editorial Tariffs Come Home to Roost mentions the Ottawa tariff, in which Canada raised the duties on American goods and lowered the duties on British goods. The results of this trade war was a significant decrease in trade globally and the movement of factories from the United States to Canada (Tariffs Come Home to Roost).

In 1932 Hoover was running for re-election. He was an extremely unpopular candidate as many people blamed him personally for the Great Depression. Despite this, the Republican party was continuing to run on a platform of economic protectionism and supported the Smoot-Hawley Tariff. The Democrats countered with a platform of lowering tariffs and “…[the Democrat’s] candidate, Franklin D Roosevelt, hammered Hoover during the campaign for signing the Smoot-Hawley bill” (Gordon).

This topic of election platforms moves directly into an analysis of Knott’s cartoon.  A political platform is the set of goals and policies for a political party. Individual portions of the platform are often called “planks”. Knott uses these terms to form a visual pun. The GOP platform here is literally unable to support Hoover as he tries to woo voters. Notably the plank that is the weakest and responsible for this disaster is called the “tariff plank”.  The implication is that it does not matter how solid the rest of the platform is, this one issue is enough to bring Hoover down.

Hoover’s literal downfall is not a private disaster either. There is a crowd gathered around, and the disaster is very apparent to the people who are watching it. The gathered crowd is dressed in casual clothing and sitting on the ground; they are not peers of the suit-wearing Herbert Hoover. The people are smiling as they watch Hoover fall. They seem amused that Hoover is finally seen suffering repercussions for the tariff that impacted them. On the stage there is a microphone, perhaps representing the rest of the country who might listen to such a speech over the radio. The entire nation is aware of what is happening.

Interestingly, it is not Hoover himself who is the cause of the failure. This is perhaps reflective of the fact that although he signed Smoot-Hawley into law, he objected to what it became after special interest groups and Congress finished drafting it. He went so far as to denounce the Smoot-Hawley Tariff, and only signed it into law under pressure from his party (Gordon). In the comic, Hoover is not failing the G.O.P. Platform of economic protectionism, the platform is failing his reelection efforts. The author of the editorial suggests that if Hoover were to “…confess in open meeting that he committed a great sin when he signed the tariff act against his better judgement” (“Tariffs Come Home to Roost” 2) it would be very successful with voters.

The wrong tariff at the wrong time can result in a trade war with global repercussions. The “Blessings of High Tariff” in the cartoon were enumerated in the accompanying editorial as “…poor business, low wages, and great unemployment” (“Tariffs Come Home to Roost” 2). Tariffs were and are a powerful tool for improving a national economy, but their deployment must be judicious. Knott chose to focus this particular cartoon on the personal, political repercussions of the tariff.

 

Works Cited

“The Battle of Smoot-Hawley.” The Economist, 18 Dec. 2008, www.economist.com/node/12798595. Accessed 27 Mar. 2018.

Gordon, John Steele. “Smoot-Hawley Tariff: A Bad Law, Badly Timed.” Barrons, 21 Apr. 2017, www.barrons.com/articles/smoot-hawley-tariff-a-bad-law-badly-timed-1492833567. Accessed 26 Mar. 2018.

“Herbert Clark Hoover.” Encyclopedia of World Biography, 2nd ed., vol. 7, Gale, 2004, pp. 483-485. Gale Virtual Reference Library, http://link.galegroup.com/apps/doc/CX3404703059/GVRL?u=txshracd2598&sid=GVRL&xid=71e4ab99. Accessed 22 Feb. 2018.

Knott, John Francis. Right in the Middle of his Speech. 15 Oct. 1932. America’s Historical Newspapers, infoweb.newsbank.com.ezproxy.lib.utexas.edu/iw-search/we/HistArchive/?p_product=EANX&p_theme=ahnp&p_nbid=L63Q49PFMTUyMjMzMzk1Mi42MTE4MzI6MToxMjoxMjguODMuNjMuMjA&p_action=doc&s_lastnonissuequeryname=4&d_viewref=search&p_queryname=4&p_docnum=1&p_docref=v2:0F99DDB671832188@EANX-10483D9233E8A080@2426996-10483D92A9E93CD3@17-10483D94E2A30003@.

“Smoot-Hawley Tariff Act.” Gale Encyclopedia of U.S. Economic History, edited by Thomas Carson and Mary Bonk, vol. 2, Gale, 2000, p. 933. Gale Virtual Reference Library, http://link.galegroup.com/apps/doc/CX3406400866/GVRL?u=txshracd2598&sid=GVRL&xid=370b678b. Accessed 22 Feb. 2018.

“Tariffs Come Home to Roost.” Dallas Morning News, 15 Oct. 1932, p. 2. America’s Historical Newspapers, http://infoweb.newsbank.com.ezproxy.lib.utexas.edu/iw-search/we/HistArchive/?p_product=EANX&p_theme=ahnp&p_nbid=T58A4FEJMTUyNjM1MTgwMy42MjQ1MjI6MToxMjoxMjguODMuNjMuMjA&p_action=doc&d_viewref=search&s_lastnonissuequeryname=9&p_queryname=9&p_docnum=1&p_docref=v2:0F99DDB671832188@EANX-10483D9233E8A080@2426996-10483D92A9E93CD3@17-10483D94EA6FB419@Tariffs%20Come%20Home%20to%20Roost

Roosevelt’s Cotton Tariff

A good customer threatens to walk out

A Good Customer Threatens to Walk Out is a political cartoon by John Knott seeking to give immediacy and perspective to the problem of Franklin Delano Roosevelt’s new tariff on cotton goods during a fragile time in the history of the United States of America: The Great Depression. The cartoon depicts the two parties affected by the tariff – The Japanese and American textile departments. Although the “Raw Cotton for Export” is plentiful, and “Japan’s Textile Industry” is readily available, trade cannot occur because of the piece of paper that is sitting between the Japanese and American characters – the tariff on Japan’s cotton goods. The editorial accompanying this cartoon, “Cotton Blunder,” tells the story that explains the visible tension in the scene. Effective June 20th, 1936, President Roosevelt decided to raise taxes on Japanese cotton by 42 per cent. “The new tariff action will give [Japan] an excuse to retaliate by buying less raw cotton from America and more from other countries” (“Cotton Blunder” 9). Although Roosevelt was trying to help American textile companies by placing a tariff on Japanese imported textiles, it only angered Japan and threatened to perpetuate the Great Depression even further due to its implications.

After the devastating stock market crash of 1929, America’s economy had started a seemingly unstoppable downward spiral. Herbert Hoover was the standing president at the time, and although it was not his fault the American economy had crashed, it was his fault it had gotten worse. One of the worst decisions he made as president was passing the notorious “Smoot-Hawley” Tariff Act which imposed 20,000 record-high taxes on imported goods. As if facing increased inflation and skyrocketing prices for common goods was not bad enough, now people were expected to pay extra money for foreign goods (Henderson). Though it was supposed to stimulate domestic economy, it only closed the metaphorical Pandora’s box of American economics before hope could escape. This tariff hurt other nations’ economies as well, since the U.S. was previously a prominent trade partner for many countries. Now, however, their goods were not selling in the U.S. so the immediate reaction from affected countries was to enact tariffs of their own in response. Consequentially, the “Smoot-Hawley” Tariff Act set off a chain of trade blockades in the global marketplace until the world had become divided into economic blocks; effectively making the Great Depression a worldwide event.

The “Smoot-Hawley” Tariff Act was not only the downfall of the Herbert Hoover administration; it was also a catalyst for the rise of the Franklin Delano Roosevelt administration. In his campaign for president, FDR told the American people that he would lower tariffs during his presidency. True to his word, after he was elected, FDR passed the Reciprocal Trade Agreements Act in 1934. (Koyama) This act allowed Roosevelt to negotiate reciprocal trade agreements with other nations. However, in 1936, Roosevelt was faced with a dilemma: Northern American textile companies were pushing for government intervention in their competition with the increasingly successful Japanese textile market. “The immediate effects of this tremendous increase in imports from Japan, irrespective of the relation of their total volume to the total American production and consumption, were the ever-present threat to the American price structure and the resultant uncertainty and instability which had marked the American market since the influx began” (Murchison 273). But as wary as Roosevelt was about this problem of a weakened domestic industry, he was also reserved about implementing tariffs. He sought a gentleman’s agreement with Japan to set a quota that would limit shipments to about 45,000,000 square yards of cotton annually in order to regulate the influx of foreign goods. Unfortunately, talks for this agreement suddenly collapsed in May, and as a result, Roosevelt passed a 42% tariff on Japanese cotton goods.

Textile interests expressed satisfaction today over the president’s proclamation raising tariff walls in an effort to halt a sharp increase in shipments of cotton cloth from Japan to this country. President Roosevelt acted after the tariff commission reported importations of Japanese cotton goods rose rapidly during the first quarter of this year following failure to effect a “gentlemen’s agreement” with the island empire to restrict cotton textile exports to the United States. By proclamation issued yesterday under the 1930 flexible tariff act, the president increased tariffs approximately 42%, effective June 20. The higher rates will apply to the types of cotton cloth of which Japan supplies about 90% of this country’s imports, the remainder coming from Great Britain and Switzerland. The proclamation followed recommendations of the tariff commission, which investigated costs of domestic and foreign cotton cloths last year. (Tariff Hiked on Japanese Cotton Goods)

This article came out about the same time that the Dallas Morning News editorial came out. As Knott’s cartoon points out, southern cotton producers and middle men had benefitted from Japan’s increasing presence in the marketplace since Japan bought raw cotton from American manufacturers; a fact overlooked by the Roosevelt administration when making the decision to implant the tariff. In trying to stimulate the northern cotton textile companies, he effectively killed southern ones. This wasn’t the only problem Roosevelt now faced; he had also started a trade war with the Japanese. There are two ways they could retaliate now; either by implementing a counter-tariff on American goods in Japan, or by simply halting trade with the U.S. therefore Japan appears to be an unhappy customer in the cartoon, verbally threatening to take his trading business elsewhere. A frightened Uncle Sam is seen to the right, frantically asking for someone to call for Mr. Hull, the current secretary of state. After this cartoon was published, it was Mr. Hull that, with cooperation from the Japanese Embassy at Washington, could peacefully end this potentially disastrous tariff (Woolner).

This cartoon is comedic due to its use of visual humor. The Japanese man appears angry, slamming his fist on the counter, anyone’s natural response upon learning that they have been betrayed. The way the man is drawn is also a source of humor, since features like big teeth and large, circular glasses give a stereotypical American view of the Japanese at that time.

Franklin Delano Roosevelt made a big mistake by raising tariffs; a mistake that he should have avoided after seeing the negative effects raising tariffs had on the country under Herbert Hoover’s administration. He would have started a trade war with Japan and worsened the Great Depression if not for the efforts of the secretary of state at that time, Cordell Hull. In the end, Japan and America made a compromise in trade and America survived this “cotton blunder.” The lesson learned was that what may be a good idea in theory can backfire when a president’s vision fails to reach further than his own borders.

Bibliography

Balio, Tino. “Surviving the Great Depression.” Grand Design: Hollywood as a Modern Business Enterprise, 1930-1939. Ed. Charles Harpole. Vol. 5. New York: Charles Scribner’s Sons, 1993. 13-36. History of the American Cinema 5. Gale Virtual Reference Library. Web. 24 Oct. 2016.

Berglund, Abraham. “The Tariff Act of 1930.” The American Economic Review, vol. 20, no. 3, 1930, pp. 467–479.

“Cotton Blunder.” The Dallas Morning News 26 May 1936: 2. Print.

Henderson, David R. “Hoover’s Economic Policies.” The Concise Encyclopedia of Economics. Indianapolis, IN: Liberty Fund, 2008. Print.

Koyama, Kumiko. “The Passage of the Smoot-Hawley Tariff Act: Why Did the President Sign the Bill?” Journal of Policy History 21.2 (2009): 163–186. Web.

Murchison, Claudius T. “American-Japanese Cotton Goods Agreement.” Journal of Marketing, vol. 2, no. 4, 1938, pp. 272–277.

“Tariff Hiked On Japanese Goods.” Newspapers.com. The Lincoln Star, n.d. Web. 24 Oct. 2016.

Woolner, David B. “Hull, Cordell.” Encyclopedia of the Great Depression. Ed. Robert S. McElvaine. Vol. 1. New York: Macmillan Reference USA, 2004. 485-486. Gale Virtual Reference Library. Web. 24 Oct. 2016.

Zeiler, Thomas W. “Tariff Policy.” Encyclopedia of American Foreign Policy. Ed. Richard Dean Burns, Alexander DeConde, and Fredrik Logevall. 2nd ed. Vol. 3. New York: Charles Scribner’s Sons, 2002. 531-546. Gale Virtual Reference Library. Web. 24 Oct. 2016.